How to Get Your Teen Hooked on Saving

How one family is teaching their daughter.

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Teens can be so matter-of-fact about certain contemporary topics that we sometimes expect them to handle everything we throw at them with great maturity.

When our now teenage daughter was 12, like many Boomer parents we were discussing STDs like those addressed by Gardasil from Merck & Co. (MRK) as casually as chickenpox. But it's only when she got her first job with a pay stub that we dove with any meaning with our daughter into the big "talk" about saving money.

My not-quite-16-year-old has been working for about 18 months, collecting a steady paycheck from her job at our public library. She gets paid once a month, and those 6- and 8-hour weeks can add up to quite a bit of money for a teen.

From the time she received her first check, I talked to her about what she would do with her money. The conversations went something like this:

Me: $120 is a lot of money. I think you should put $100 into savings and keep $20 for spending money."

Daughter: "Mom. What can I do with $20? I'm going to keep the whole check."

Thus began my attempts to teach my daughter fiscal responsibility. We worked out a more acceptable-to-her percentage of cash to spend, and with her passbook account for savings, she could see how her money grew.

But now that she had cash in her pockets, I explained that we, her parents, were officially off the hook for movies and pizza. And, on her own, she started buying her own gifts for friends' birthdays and holidays.

When she went to a concert, she and her friends got the $10 lawn tickets, instead of the more expensive indoor seats, and I was patting myself on the back, thinking I had done so well. When she came home from that concert with a $40 T-shirt from that week's favorite band, I freaked. A little.

Me: "That's a lot for a T-shirt."

Daughter: "Sarah got the $30 T-shirt, but I didn't like it as much." (Hmm, what had Sarah's parents taught her that made her buy the less expensive shirt?)

And so it has gone. And the way it will continue to go, for a while, says Galia Gichon, founder of Down-to-Earth Finance, an independent finance education company in Manhattan that counsels clients on how to spend smarter.

"She spent that $40, and she didn't have that money to buy something else," says Gichon.

"The next time she goes to buy something, she'll think twice. In the big scheme of things, it's a cheap lesson," she adds. "Parents have got to let them learn on their own. They can't control everything."

"It's part of the process of letting go," agrees Mary Claire Allvine, CFP and co-author of "The Family CFO," published by Rodale . "If it's not illegal or dangerous, you have to let go. As long as you have not created a situation where there are infinite pockets-you are not giving her the $40 for something else-then she should be allowed to buy that shirt and decide for herself if it was a worthwhile purchase."

Allvine says the important thing is to talk to your kids now about saving.

"This is a critical moment," she says. "Try offering financial lessons to a 25-year-old or a 35-year-old - it's too late. If parents can impose something on their kids while they are still under their roof, they won't have their kids coming back to them when they are 25, asking you to help them solve their financial problems."

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